Apple's iOS devices are found to be more profitable to Google than its own Android devices, according to a data report revealed by court documents.
Latest reports in the Guardian suggest that the earnings of a proposed settlement in an ongoing patent dispute with Oracle allows Google to make four times as much from an iOS device than it does from devices running its own Android OS.
According to court documents, Google has made about $543m from Android following its launch in the period of 2008 to 2011. An estimated 200 million Android devices would be activated by the end of 2011, with around 90 million of these activations coming in the last two years.
If Google's net turnover is split, it works out to about $10 per handset. Despite Google licensing Android to handset manufacturers for free, it generates gross revenue of 30 per cent through advertising and app sales. However, the company has never officially revealed how much it makes from Android handsets. Even though the court documents do not reveal how Google works out Android revenue, it still shows how Google offered Oracle a percentage of Android revenues, a deal which was rejected by Oracle.
Ever since the launch of Apple's first iPhone in 2007, Google has been licensing the use of its software and apps such as maps to Apple. About 315 million iOS devices have been sold and summing up Google's overall revenue through mobile devices minus Android, the Guardian reckons that Google makes around four times as much per iOS device as it does per Android device.
Asymco's Horace Dediu sums up the calculations further, stating that iOS could even be earning Google five times more than Android. Another separate analysis from Flurry conducted earlier this year further asserts that the revenue generated per iOS user by iTunes App Store is over four times that of the revenue generated by Android user through Google Play, the company's new-look app marketplace.
The same analysis further deduced that Amazon generates more revenue per active user from its App Store than its Google counterpart. This could actually lead to developers abandoning the company, predicts Flurry's Peter Farago.
"As developers make decisions to support different platforms, the ability to generate revenue will always be a key factor. Based on revenue potential, we expect to see an increasing number of developers support Amazon. We also believe that companies such as Samsung, the leading Android-supporting OEM, could also consider emulating Amazon's move to fork Android. Google will need to reduce commerce friction to maintain strong developer support," opines Farago.
On one hand, Google relies on iOS to generate surplus mobile revenues, while on the other Apple is hell bent on crushing Google's Android, driven by the determination of its late CEO and co-founder Steve Jobs, according to a Bloomberg Businessweek report last week.
Apple's tactic would be to force Google into submission through proxy patent wars with Samsung, the largest manufacturer of Android-based handsets.
Google's acquisition of Motorola should pave the way for another strong reason for Apple to extend its proxy patent wars against the search engine giant. The latest IDC survey reports suggest the number of Android-based devices will grow from a 29.4 per cent share in 2011 to a market-leading 31.1 per cent share in 2016.
In contrast, iOS-based devices will grow from 14.6 per cent in 2011 to 17.3 per cent in 2016, according to the company's projections. Despite this, Android may still face the same problems of mobile revenue generation over this period, it seems.
"Android's growth is tied directly to the propagation of lower-priced devices. So, while we expect dozens of hardware vendors to own some share in the Android market, many will find profitability difficult to sustain," said Tom Mainelli, research director, Mobile Connected Devices for IDC.
"Similarly, we expect a large percentage of application developers to continue to focus their efforts on iOS, despite the platform's smaller overall market share, because iOS end-users have proven more willing to pay for high-quality apps," he adds.